ETMarkets Fund Manager Talk: Diwali Muhurat trading symbolism has gone away, says Basant Maheshwari

Veteran money manager Basant Maheshwari, who has spent over three decades on Dalal Street, says the symbolism of making a trade every Diwali Muhurat trading day has gone away over the years. “I have realised that on every Diwali the market opens higher, then drifts lower towards the close,” says the smallcase manager in this interview with ETMarkets. Edited excerpts:

What memories do you have of your first Diwali Muhurat trading experience?
In the early 90’s, there were no TV broadcasts then and my broker, who was also a friend, invited me over to his office for puja. It was more of a get together where you kept asking the old and wealthy for stock tips.

Do you make it a point to trade every Diwali? How auspicious is the occasion?
No. The symbolism has gone away over the years. I have realised that on every Diwali the market opens higher, then drifts lower towards the close. It opened higher because everyone was buying and it closed lower as the buyers were done with their symbolic buying.

What was your first Diwali pick?
My first big bet on a Diwali was TV18. It was a coincidence that I bought it in 2003 on Diwali day. The stock returned 14x for me over the next 4 years.

What would be your trading/investing strategy this Diwali?
Nothing. Just keep holding to what you have without worrying too much about the headline news. We have the same strategy that has worked very well for us over the last two decades.

Whether it is trading or investing, there is always an element of luck involved due to the sheer unpredictability of market behaviour and herd mentality. In this context, do you see Muhurat trading as an opportunity to bring luck in your favour?
Luck is good judgement with large allocation. You can be lucky for a day, week or a month. But if you have survived the market for 3 decades it’s more about skill than luck.

What would be your advice to new investors for the Muhurat trading day?
Buy equity and not gold. Our ancestors didn’t know about equity so they bought gold. We have the option of buying higher return assets so we should buy equities. Also, they should invest in established companies which have demonstrated their earning power over different cycles. It is always a fad to invest in a microcap but that requires a lot of due diligence which a new investor may not do. We do a lot of research while buying a new mobile phone so that it has a good touch screen, reliable battery and the best camera. But we invest our hard earned money without any basis. So, advice for new investors is to define what companies and sectors they understand first and then select companies after sufficient analysis.

Diwali stock picks are very popular among both new and old investors on Dalal Street. Any ideas you would like to share with us?
Nothing stock specific. Just remaining invested and buying more is more important than specifically targeting to buy more on a specific day of the year. Big wealth is created by investing in a few ‘great’ ideas and sticking for a long period of time i.e. at least 3-5 years. What we look for is earnings growth in a stock and not any festival period to invest our money. Great ideas come once in a while and should be acted on with full gusto, so that you can celebrate each and every day like a festival.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)